SOURCES: CTV-Rogers likely to lose money on Vancouver Olympics
December 17, 2009 · 24 Comments
Canada’s Olympic networks have fallen below sales projections and will probably lose money on the Vancouver Winter Games, industry sources said this week.
The Olympic consortium consisting of CTV Inc. and Rogers Media set a sales revenue target of more than $200-million, but insiders say they’re well off that mark.
“There is no way they can make money,” one advertising source said. “Especially if you include the displaced revenue of the U.S. shows that would normally be on CTV at that time.”
With the Winter Olympics 57 days away, it is believed that the CTV-Rogers consortium is at about 65 to 70 per cent of its initial sales goal.
A steep TV rights fee paid to the IOC coupled with the country’s economic woes have put CTV and Rogers in a potential losing position.
One source pegged the amount of advertising revenue earned to this point at about $130-million.
Keith Pelley, the head of the CTV-Rogers Olympic consortium, refused to comment on revenue earned, but said sales are going well.
“First and foremost, it’s fun to be the underdog because they’ve been saying that (CTV-Rogers would have difficulty breaking even) for a long time,” he said in an interview.
“We have two goals. One is to break even. And the second is to produce the Games at a level that has never been seen in Canada for any production.”
CTV-Rogers paid a record $93-million (U.S.), about $100-million Canadian, for the broadcasting and digital rights to the Vancouver Games. Production costs for the multiple platforms that will provide a whopping 2,200 hours of TV coverage (plus another 2,200 hours of digital content) is budgeted at $50-million. In addition, sources estimate another $10-million has been spent on marketing and perhaps an additional $5-million set aside to fete sponsors.
That adds up to costs totaling $165-million. Based on the estimated $130-million revenue figure to date, the CTV-Rogers consortium has less than two months to earn $35-million to push earnings to a break-even point.
Pelley said interest from advertisers is increasing.
“As momentum continues to build, we continue to get pro-activity in the marketplace,” he said.
He said a domestic Olympics, regardless of hard times, has a powerful appeal to advertisers.
“We are selling the biggest event in Canadian history. And independent studies show this will be the largest television audience in Canadian history.”
Pelley said the consortium has signed up 102 sponsorship partners. Some advertisers have spent as little as $5,000 for advertising spots. Others, the gold brand sponsors, are in for over $15-million.
Critical to the CTV-Rogers advertising strategy, Pelley said, are the multiple platforms that will include, along with the CTV main broadcast network, sports, news, music, ethnic and aboriginal channels, as well as the Internet, mobile devices and the Rogers radio network.
“We can customize (ad packages) to a time zone, to a sport, to an ethnic group, to an income tax bracket, to a demographic,” he said.
Sales expectations were dialed down after the world-wide economic meltdown a year ago.
Said one source, “Given the circumstances they’re done a good job of taking in as much as they can.”
Toronto angle to Tiger Woods story
When Toronto sports injury doctor Anthony Galea treated Tiger Woods, who was recovering from knee surgery a year ago, the story was largely ignored.
Even when it was reported in October that Galea was being investigated for the importation and sale of unapproved drugs, the media didn’t twig to the Woods connection.
But it raised a red flag for Bob Weeks, a Toronto journalist and editor of SCOREGolf Magazine.
He wrote a piece about it on the SCOREGolf website, but, of course, that was long before the Woods car accident and parade of mistresses. And it was two months before Galea was formally charged.
Bob forwarded his piece to one of the leading golf blogs in the United States, GeoffShackelford.com. But it wasn’t used, despite the fact Doug Barron had just become the first PGA Tour player to test positive for a banned substance.
“In my mind, there was a definite chill factor going on here — no one wanted to bring up Tiger Woods and a possible banned substance because Tiger was known for shutting out media who cross him,” Weeks said.
For example, CBS announcer Peter Kostis was given the deep freeze by Woods when he criticized his swing.
But after the Woods scandal broke and once Galea was charged with criminal conspiracy, things changed. Weeks received a call last week from Don Van Natta, an investigative reporter with The New York Times, seeking help and asking if Weeks would work on the story from Toronto. Weeks, however, was tied up at the Canadian Olympic curling trials in Edmonton. He said he wouldn’t be available until Tuesday of this week.
“By that time, he’d nailed the story and now the world is running with it,” Weeks said. “Apparently no one is fearing being shut out by Tiger any more.”
You judge the Olympic ads
This website was built by filmmaker Joseph Bat (blame for the spare design is mine). He has completed one film, Scarecrow, which is awaiting distribution, and has written several scripts. His website is here.
Joe felt the Olympic ads that he had seen were flat and somewhat uninspiring. So, he took some stock footage, added production music, and produced his own.
Before you see his work, take a look at this CTV clip that includes Olympic ad footage (it is preceded by a brief commercial). The clip below is a Wonder Bread Olympic commercial.
Here are Joe’s two ads:
Spot #1:
Spot #2:
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Canada House is being designed by an American company; the opening and closing cermonies are being produced by an Australian Company with some key technical staff being American; sets for CTV are designed by an American company. CTV gets to use publicly owned transmitters, (will the public get revenue for the use of these transmitters?) , becuase they can't cover all areas according to the CRTC. So how is it that we are showing Canada's best?
Bill, how much of this is a result of the peeing match (you know what I mean) that the bidding for these television rights has become? Just looking at what the networks in the States will shell out for the right to put the NFL over the airwaves is incredible, seems like the Olympics is similar. They shell out to a point where they can't make that money back, particularly when the value of their ad time is dropping. Doesn't help when the Olympics is on 24/7 too, production costs must be incredible.
I don't think their is anywhere near the value of being the "Olympic network" that a lot of these media companies seem to place on it. Is that going to make me watch CSI: Boise on Wednesday night, because they have the Olympics in February?
Keith Pelley, the head of the CTV-Rogers Olympic consortium said…
whatever you pay him to say. Proving once again, you can make a whore say or do anything. Or give him a 'title' and some money and he'll do the same for you.
More Kool Aid for you, Keith?
What a joke.
I disagree that Joe's video's are better than the Wonderbread's or CTV's ads. Far from good, he's dished more pap. Most boring shite evar. That's what happens when you put clips of stock shots together. Sweet FA. It could be an ad for a credit card, financial service, retirement home — Anything but Olympics.
Wonderbread's is a wonderful concept, well executed [although, who the hell even buys that product].
I don't see any excitement or fun in Joe's video's, let alone concept or message and please, spare me that soundtrack too. GAG.
You are certainly entitled to your opinion. I personally thoroughly enjoyed Joe's commercials. And prefer them. I can't even remember seeing one of the official commercials on TV and that Wonder Bread commercial, which you seem to think is a great concept has been copied several times (kids as athletes).
Anyway, I think what we're getting to here is and what most will agree on is Canada has seriously made a blunder of the Olympics. I think a lot of Canadians don't even seriously know we're hosting them next year.
"Anyway, I think what we're getting to here is and what most will agree on is Canada has seriously made a blunder of the Olympics."
I highly disagree. When February rolls around, it's all everyone will be talking about and watching. You're right that the excitement hasn't come yet, but it will.
If the losses are indeed this bad, I am just glad it is CTV-Rogers taking the haircut, and not our publicly funded broadcaster.
CTV paid 4 times the fee that CBC paid for Torino. I think the mother corp paid $28 million US for the Torino Games. If they are going to overbid ridiciously, then it serves them right. If CTV's coverage of the torch relay cermony in Victoria is going to be any indication, I think there coverage is going to be a disaster. I read is some outlet that CTV is going to go heavy on features and a little less on live action which I hope it is not the case. Plus, I hope CTV doesn't invest the coverage with Ben Mulroney, Tanya Kim and Dan Levy on which Hollywood Celebrity is going to be in Whistler because I really don't care. I wan't to see Christina Groves, Alex Gough, Sidney Crosby and Patrick Chan in action, not Pamela Anderson and TMZ in Whistler…
Well said Jeff. This is just another example of many highlighting Rogers greed and poor judgement of marketplace needs/wants. Remember reverse billing? Too bad their arrogance and a "we I know best attitude" seems to be the way of their business is about a decade old in the world of intelligent brand marketing. Rogers have bungled the Blue Jays, the Bills in Toronto series, and now the Olympic coverage. Also, new media doesn't mean better media. The CTV-Rogers group seem hell-bent on the "media platform of the month" and to push out the proven standard media methods. Case-in-point, in the 50s the TV was supposed to be the death of radio. Don't think watching a hockey game on a BlackBerry is going to replace a 60" TV screen anytime soon, if ever!
Joe's commercials are far superior to anything that I have seen from the consortium so far. The stuff that they show is quite painful to watch over and over and over again.
Bill- great videos. They capture the emotion of the games more than any of the stuff I've seen on the networks. The ones you are showing from this filmaker are miles & miles ahead of the terrible, uninspiring consortium campaign. I don't even recall seeing any of the ads in the CTV piece. They have done an awful job markteing these games. No social media. Last night on the news they spent 2 minutes showing marginal news anchors and reporters carrying the torch for 2 minutes. Ridiculous. $10 million spent, on what? The goal of these games out of the gate was to make money – to strive to break even in a home Games shows you how bad things are for the consortium. The spin is on; combine the lost revenue on the US shows the networks as you noted and it's worse than anyone thought. Bring back to CBC.
I agree with everybody. Joe's videos are powerful and inspiring. Bill Houston
“We have two goals. One is to break even. And the second is to produce the Games at a level that has never been seen in Canada for any production.”
Well you are going to fail on both those goals. First, to set a goal is only to "break even" is a poor mindset. The idea is always to make money, not just break even. And lastly, if by only looking at those official Olympic commercials, we Canadians can tell it is going to be the same crap over again. Its both sad and inspiring, however, that it takes a filmmaker who isn't apart of the Olympics to create something that actually got my blood going. Great videos, Bill.
I am very dissapointed in the Olympic ads that have been appearing on TV. Actually, they haven't even really been appearing much. We aren't far away from the Olympics starting and you don't even hardly see any ads on TV.
The two videos you posted by that filmmaker were wonderful. They were rousing! I agree with the other poster the official one's we are seeing are the same old, same old.
I'm getting a little tired of Keith Pelly's hyperbole on this. Thanks for calling him out a little William. This is the same guy who served as Argos President for Sokoloski and Cynamon – two guys who couldln't even afford to buy the team on their own. Pelly and his new owners trotted around town like kings when Braley was the one paying the bills. What a sham.
Criticizing Keith Pelly for his work with the Argos is ridiculous. While I am not a CFL fan, even I can admit that he did an amazing job restoring that team's image. The team's brand has taken a big hit in recent years — and I would strongly argue that this would not had happened if Pelly hadn't left.
mlbfan – you seem to forget that Brad Watters and his administration spent alot of time talking about how the attendance figures for the Argos during Pelly's time were largely fictional (lots of freebies). This led to further losses for C&S that they had to lean on Braley to pay. All the while, Pelly 's image as the "saviour" and the C&S ownership honeymoon is viewed much differently when looking back now.
I agree with with Pat Rosen. Keith Pelley really seems to like the spotlight, and not so much the accountability end of the businesses he is involved with. Pelley did help put a new face on the Argos and they did win the Grey Cup, but how much of that was his doing? That cannot be quantified as the team on the field had nothing to do with his position as the team President.
And now the Olympics are way under funded and heading for a huge loss, which is headed up by, yep you guessed it, Keith Pelley.
Thanks Voice of Reason. Also, Pelly has been lobbying – to anyone who will listen – for a job with an NFL team if one ever comes to Toronto. He is also hoping to get a shot at Chris Rudge's job with the COA. I wonder if his buddy Bob McCown would criticize Pelly and the COA then. Probably just ignore it like he did with the C&S/ Braley Argos ownership debacle.
William, great posts on the video's. I must say, the evil-consortium as your friend Bobcat likes to call it really dropped the ball with the same, reptitive commercials that they have been running for close to a year now. The commercials had a chance to be just as memorable as the games were, but instead its just been the same thing over and over again… heck, get the guys who did the "I am Joe Canadian" commercials, people loved those…
A couple of questions William
1) How much did NBC spend for the 2010 and 2012 Games? I know US rights fees are way higher than Canadian, but I'm interested to see how much more they paid than CTV for a package that included an Olympics in Canada.
2) I read today that CTV's (and presumably TSN's and Sportsnet's) Olympic broadcast schedules come out on January 11. Do you have any clue as to what they might look like (aside from obvious things like Canadian hockey, figure skating finals and curling finals on CTV)? For example is there specific sports that Sportsnet and TSN will focus on (like TSN did when they broadcast the games with CBC).
NBC paid $2.2-billion for London and Vancouver, with $820-million of that for Vancouver rights — about 10 times the CTV-Rogers fee of $93-million. And NBC will lose $200-million, about 10 times the projected losses for CTV-Rogers.
At least they are doing better than NBC. Jeffery Immelt is already expecting a $200 million lost on the games.